Convertible bonds have burned hedge funds in a big way this year, but one firm is betting that next year will bring a different story.

RWC Partners plans to launch a convertible bond fund in January, aiming to profit from the difficulties convertibles have suffered this year. The firm’s Distressed Convertibles Fund will invest in undervalued convertible bonds, which have been made even cheaper by forced selling, much of it by other hedge funds.

The long-only fund will not employ the arbitrage strategy that has caused so much suffering this year, and will invest only in listed convertibles.

The fund will be managed by Miles Geldard, who runs the firm’s two-year-old Global Convertibles Fund.

From the current issue of

We are accustomed to splitting trading into technical and fundamental buckets. Both involve crunching data; one set includes market fundamentals and the other pure price data. Alternative data is a third bucket that is gaining traction.